Immigration Surge Contributes to Rising U.S. Rental Costs

The recent surge in U.S. immigration has significantly influenced housing demand and rental prices, according to a new report from the Department of Housing and Urban Development (HUD). With average monthly rent in the United States now approaching $2,000, renters are feeling the impact of a 36% increase over just five years, based on data from Zillow.

HUD’s “Worst Case Housing Needs 2025 Report to Congress” identifies immigration as a major factor in this housing crunch. Between 2021 and 2024, the foreign-born population in the United States grew by approximately six million people—what HUD describes as the largest population spike over such a brief period in American history.

The impact of this demographic shift on housing has been substantial. According to the report, immigration accounted for up to 100% of housing demand growth in certain regions and roughly two-thirds of total rental demand growth nationwide during this period. The analysis examines the impact of both documented and undocumented immigrants, with the Pew Research Center estimating the undocumented population at around 14 million as of 2023.

Housing pressures have not been distributed evenly across the country. California and New York have experienced particularly pronounced effects from immigration-driven demand, according to HUD’s findings. Nationwide, the growth rate of households headed by non-citizens nearly doubled after 2019, jumping from 7% during 2015-2019 to 13% during 2019-2023.

While immigration has intensified housing demand, housing experts caution against viewing it as the sole cause of the current crisis. Many analysts who spoke with NPR point out that today’s housing shortage has deeper roots, dating back to the 2007-2008 Great Recession.

When the housing market collapsed during that period, construction activity plummeted as builders went bankrupt and financing became scarce. According to Bankrate analysis, the construction industry never fully rebounded to pre-2008 building levels, as confirmed by data from the St. Louis Federal Reserve.

Market experts typically consider a balanced housing market to have five to six months of available housing supply. Currently, the U.S. market offers just 3.5 months of supply—an improvement from pandemic lows but still significantly below healthy levels.

“Immigration didn’t create the housing crisis so much as intensify pressure on a market that was already broken,” noted NPR in its reporting on the issue. The news outlet found that undocumented migrants tend to concentrate their impact on rental demand specifically, but they are entering a system already constrained by long-term underbuilding, restrictive zoning policies, labor shortages, and escalating construction costs.

The situation is further complicated by the growing presence of institutional investors in the housing market. According to Realtor.com, investor buyers accounted for 14.8% of all home purchases in the first quarter of 2024—the highest share since the company began tracking this metric.

Many investor-purchased properties are converted to rentals or quickly resold for profit, which reduces the inventory available to individual homebuyers and puts additional upward pressure on rental prices. The result is a market where potential homeowners find themselves unable to purchase, rental inventory tightens further, and both purchase and rental prices continue to climb.

HUD’s findings add a new dimension to an already contentious debate about housing affordability in America. While the data clearly shows that immigration has materially increased housing demand, particularly in the rental market, economists and housing advocates maintain that these demand pressures would be far less problematic if the United States had maintained consistent homebuilding over the past 15 years.

The report ultimately illustrates the complex interplay between immigration policies, housing construction, investor activity, and affordability—highlighting that the current housing crisis stems from multiple factors rather than any single cause.